Penny stocks are favored by growth-minded investors for their ability to deliver outsized returns in a relatively brief period of time. While these stocks are appealing for their low share prices (generally under $5.00) and high growth potential, these investments also carry significant risks. That said, for patient investors who are willing to accept the risks, penny stocks can present substantial opportunities.
Among the penny stocks that have earned top ratings on Wall Street, Complete Solaria (CSLR) and ASP Isotopes (ASPI) have both outperformed the broader equities market so far this year. CSLR operates in the solar industry, while ASPI focuses on nuclear and medical technology — capital-intensive markets that are well-positioned to benefit from increased investment and lower borrowing costs as the Fed shifts toward rate cuts. Here's a closer look.
#1. Complete Solaria
Based in California, Compete Solaria (CSLR) is an emerging player in the solar industry, known for its end-to-end solar solutions, covering everything from engineering to installation services. With a mission to reduce the carbon footprint and make solar energy more accessible, they offer a wide range of products for both homeowners and commercial use.
Valued at $142.3 million by market cap, shares of CSLR have surged 82.6% year-to-date, far outpacing the broader S&P 500 Index ($SPX), which has gained 20.3% in the same time frame.
Complete Solaria is perhaps best known for snagging the assets of recently bankrupt SunPower for $45 million in cash, which sent CSLR stock higher by 6% on Sept. 24.
However, it's been a busy year for the company, which has undergone significant leadership changes in 2024 with the appointment of T.J. Rodgers as its new CEO, while Daniel Foley takes on the role of CFO. Shortly after the C-suite shake-up, CSLR announced in early July that it had canceled $67.6 million in private equity debt from its balance sheet.
On the Aug. 14 Q2 conference call, Rodgers was circumspect about the pending SunPower deal, but said, “I expect to have a company that integrates very quickly, has shared values, and takes advantage of the tailwind in the solar market.”
Analysts tracking the stock expect Complete Solaria to return to revenue growth in fiscal 2025, though the company isn't expected to achieve profitability on a full-year basis until at least 2026.
With only two analysts in coverage, CSLR has a "strong buy" rating on Wall Street, with the mean price target of $4.50 implying a 53.6% upside from current levels.
#2. ASP Isotopes
Based in Washington, DC, ASP Isotopes (ASPI) is a development stage advanced materials company specializing in the development and commercialization of enriched isotopes for various industries, including medical diagnostics and nuclear energy. The company focuses on innovative isotope production techniques to meet global demand for these critical materials, offering advanced solutions that contribute to sustainability, health, and energy sectors.
Valued at $151 million by market cap, shares of ASP Isotopes have rallied about 52% year to date, outperforming the broader market with ease.
ASP Isotopes is just starting to make money, with Q2 2024 revenue of $1.02 million marking a steep increase from zero in the year-ago period. Additionally, ASPI narrowed its net losses from $15.8 million in the first six months of 2023 to $7.9 million for the six months ended June 30, 2024.
However, despite the exciting growth prospects for nuclear-related technologies, it's worth pointing out that ASPI is far from profitable just yet.
In July 2024, the company announced an offering of 12 million shares at $2.50 per share. In its second-quarter 10-Q filing, ASP Isotopes said that its cash and cash equivalents balance of $28.2 million, along with the $34.5 million generated by the July share offering, “will be sufficient to fund its operating expenses and capital requirements for more than 12 months,” however, ASPI expects “it will need to continue to raise capital through additional equity and/or debt financings and/or collaborative development agreements to fund its operations.”
In other words, the company's cash burn is likely to exceed its revenue generation abilities for the foreseeable future, which means additional, dilutive share offerings are a possibility.
With just one analyst in coverage, ASPI has a ”strong buy“ rating, with the $4.50 price target indicating expected upside of 65.4%.
